Lenovo Focuses on Integrating IBM Servers, Motorola Into Company

The company, which paid almost $5 billion last year for the acquisitions, also is looking to pare its workforce through voluntary buyouts.

Lenovo server

Lenovo is offering buyouts to some employees as it begins to focus on integrating Motorola Mobility and IBM's x86 server business into the fold.

Lenovo last year spent almost $5 billion buying IBM's low-end server business and Motorola from Google. The moves instantly made Lenovo the number-three vendor in both the global server and smartphone markets, complementing its status as the world's top PC maker.

With the deals closing in the fall, the work turns to bringing the new businesses into the larger Lenovo fabric.

In an interview with The Wall Street Journal, CEO Yang Yuanqing said: "Now we need to pay more attention to the integration," Yang said from the 2015 Consumer Electronics Show (CES) in Las Vegas.

Part of that integration apparently involves workers. The company, which has more than 60,000 employees worldwide, added about another 10,000 when it acquired Motorola and the IBM server business. Lenovo spokesman Ray Gorman has told media outlets that buyouts were offered to some employees in the United States, China and Japan, though he declined to say exactly how many workers are eligible.

The voluntary buyouts were offered in December, and the deadline for accepting them closes Jan. 9.

"We are putting this program in place to support a career, talent and skill-set transition that will help Lenovo remain competitive in a rapidly changing marketplace," Gorman said in an email to the Charlotte News & Observer. "It's also a benefit for those employees who plan for an earlier retirement, want to pursue volunteer activities or are considering a second career."

It was a year ago that Lenovo, just days apart, announced it was buying IBM's server business for $2.1 billion and handset maker Motorola Mobility from Google for about $2.91 billion. The announcements of the acquisitions came a year after Lenovo had unseated Hewlett-Packard as the top vendor in a PC market that had seen global sales fall dramatically since 2011, due in large part to the growing popularity of tablets.

Lenovo officials have said PCs will continue to be a central part of their corporate strategy going forward, but the IBM and Motorola deals were part of the company's larger ambitions to become a dominant player in all segments of computing. They are hoping to replicate in servers and smartphones the success Lenovo has had in PCs since buying IBM's PC business in 2005.

Just before closing the IBM server deal in October, Yang said in a conference call that executives would push to rapidly grow its Enterprise Business Group over the next year, making it a profitable unit with more than $5 billion in revenue.

With Motorola, Lenovo officials are looking to extend the company's reach into the smartphone market, including in its home base of China, where such companies as Xiaomi are building worldwide brands with devices that offer the same capabilities as those from well-known vendors like Samsung, but at lower prices and often without contracts. Motorola officials on Jan. 6 said that next month they will sell the Moto X and other smartphones in China.

CEO Yang told The Wall Street Journal he expects Motorola to expand what Lenovo does in China while giving it greater access to the U.S. market. He added that Lenovo and Motorola will have distinct missions going forward.

"Lenovo will continue to focus on the carrier market, so probably mainstream to entry-level [prices]," Yang said. "Motorola will focus more on the open market and online sales … the premium and mainstream price bands."